The Factor Nobody Talks About: ‘LUCK’

Whether LUCK would be in your favor, depends on how passionate you are to achieve your goals and also on how easy/difficult it is for you to give up on them

Let’s better define the term before we go further,

Luck (noun): Events that influences your life but are not of your making

‘I am a great believer in luck, and I find the harder I work the more I have of it’ – Thomas Jefferson

Such events – good luck and bad luck are the main shaping forces of human life.

Luck is the major factor that plays a role in everybody’s life. Yet we are not ready to acknowledge this factor publicly, but deep inside we all know the value of luck.

Even our existence is a result of luck, the coming together of our Parents. If we discover, how they first meet? We will almost certainly find that it was by chance. Because of those random events, we are alive today. Our sex, size, color of skin, eyes, shape of nose and a host of other factors that we had no control of; Factors that already has influenced your life heavily and will continue to influence till you die.

Why do people deny the role of luck? There are a few reasons for such behavior. Firstly; we hate to think we are at the mercy of random happenings. We prefer to stay in the illusion that we control our own destinies. Life seems to be safer when we can say that, “The future will happen as we plan it”. Off-course, it would never be. Deep inside, we all also know it won’t ever.

Another reason why we prefer not to discuss luck’s role is that it diminishes us and steals our dignity. We are not ready to confirm in public that how lucky we are to reach at this stage because we think that our value to the other person might fall. We think that the other person will assume its the result of luck where we stand today, so we avoid revealing how we got bumped into that situation randomly and got the opportunity to being lucky .

Nobody talks about their success with luck. You read any autobiography of successful people, you will find no one talking about how they got lucky and reached their current stage. Instead, you will find them talking about their passion, courage, smartness, talent and all hard work they put in to reach at that stage. Which off-course they had, but what about LUCK? You aren’t likely to find the word mentioned anywhere.

‘Success should not make you think you are God’s gift to mankind. You should never forget that you are what you are because God choose you to be there. We must realise that LUCK plays a big part’ – Rakesh Jhunjhunwala

A successful person is known by everybody because he has achieved what he wanted, but we don’t know anything about the person who hasn’t,when he has also put in the same level of hard work, courage, passion but the missing element is ‘LUCK’ in their life at various situations.

Take an example of cricket, we all know who are playing for the country but we have no idea about who all are playing and how talented they are. There are so many people playing cricket in India but very few of them gets a chance to represent the country at the international level.

‘Luck is what happens when preparation meets opportunity’ – Seneca

Successful people have one thing in common, they focus on the process more than the outcome and they are not likely to give up and do everything possible to achieve their goal. So somewhere in the middle of their process and their courage they get a chance to be lucky. They are lucky because they are reluctant to give up and not follow the short cut.

‘The amount of good luck coming your way depends on your willingness to act’ – Barbara Sher

We can look at this by referring to a scene from the movie ‘Dhoni – the Untold Story’, where we had seen that he is such a wonderful cricketer but still he struggles a lot to be a part of Indian cricket team. Watching the scene where he is working as a ticket collector at a railway station and all of sudden he just leaves that job and gets back to cricket, finally by his skills, hard work and not ready to give up attitude makes his LUCK favor him. Now we all know ‘M.S. DHONI’ and his capabilities.

‘Luck sometimes visits a fool, but it never sits down with him’ – German Proverb

There is a time in our life were we are too lucky, and things just happen in the middle of something, were we are not controlling and life gives us a surprise. But that random event is likely to stay for a short term if we are not ready to act on it and make full use out of it. The random event can change your entire life but it’s impossible to know when? How? Where? This event will fall into your kitty. So you have to just stick to your process and wait for the random lucky events to occur in your favor and make the most of it.

So lets talk about ‘LUCK’ and ‘Skill’ in Investing :

“The stock market is all gambles”

“Making money in the stock market is all about LUCK”

How often do you hear people say the above sentences? In fact, if you check the average person’s view of the stock market, you would be convinced that the stock market is for LUCKY people.

Investing is 90% LUCK, 10% Guts – Shankar Sharma

Shankar Sharma’s view on investing is that 80-90% of investing success is LUCK and the rest 10% or maybe 5% is your investment process. But to get the rest 90% work for you; you have to study the fundamentals of the company, understand the business model, be patient and invest with long term horizon.

You must have heard lots of stories about people becoming millionaires over night or in a short span of time, thanks to the stock market.

There are two kinds of people who make money in the stock markets:

– First kind, are the people who buy something, this might be a tip from their friends, relatives or they get some tips watching news channels, then when it goes up they think it was their skill that made profit. Next time they buy something and woah!!! It makes money again and now they are the king!! Then comes the day when their “best time in the market” or “luck” is over and they start losing money and this time its “bad luck” as they say!! They keep on trying to prove that they are knowledgeable and have mastered the skill to understand how market operates. At last they go bust and return from where they started. They are lucky people who made money initially but they don’t possess skill, so it reverts back to where they started.

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Reliance Communication Ltd (RCOM) in FY 2006-2008 went up by 159.65% not because company has good fundamental but herd mentality and fear of losing in people mind let the share price surge. In FY 2009 from its peak of Rs 792.30 went down by 82.59% and in FY 2017 it almost down by 96.33% compare to FY 2009 Peak share price.

‘- Second kind of people are those who are real game players. They are also LUCKY but to retain LUCK, they always do their homework (understand the business, qualitative and qualitative analysis), failed a lot of times, learned from their mistake and work hard to make money.

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The share price of Titan Company Ltd (TITAN) in FY 2006 was 22 went up to 820 in FY 2017 giving the return of 37.27 times with a CAGR of 40%. Every year company fundamental is improving and people invested in this stock face some difficult time but conviction in the company and strong fundamental of the company created wealth for the shareholders.

As great investor Peter Lynch say,

‘Know what you own, and know why you own it’

‘Behind every stock is a company. Find out what it’s doing’

When you look out into the world, whether its business, investing or your favorite sports; both skill and luck are contributing.

In stock market you must ask yourself, whether you are a trader or an investor?

Trader is someone who buys and sells the stock for short term. He is not concerned about long term prospects of a company. He is more interested in which stock will do well in short term. His decision is more based on news, technical analysis, gut feeling and thing like those.

Investor on the other hand is someone who buys the stock for long term. Investing itself is a word which means that you are putting your money in something which you expecting to grow over time. This must deal with fundamentals, company’s potential, long term prospects, cash flow generating ability, profit & loss, etc. You are not concerned about the short term movements as the focus should be on the long term view. If the company’s share price is providing value over its current price and it has consistent track record along with good future prospects and strong fundamentals with efficient and intelligent management, you should buy it.

NOTE : If you cannot manage money or you don’t have expertise in stock market. We as a ‘Concept Securities Pvt. Ltd’ can manage your portfolio with a great care and likely to be ‘LUCKY’ by following skill we posses.

‘Successful investing takes time, discipline and patience. No matter how great the talent or effort, some thing just take time : you can’t produce a baby in one month by getting nine women pregnant’ – Warren Buffet

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